Investment Pitches

Pitch Summary:
Oracle surprised investors again with first fiscal quarter results, announcing an additional $317 billion in Remaining Performance Obligations (RPO), taking total RPO to $455 billion — a 359% increase year-over-year. The company signed four multi-billion contracts with three different customers during the quarter, with further contracts expected soon. RPOs, representing non-cancellable contracts, underpin visibility into multi-year growth. Oracle now projects Oracle Cloud Infrastructure (OCI) revenue to grow from $18 billion this fiscal year to $144 billion over the next four years, reflecting rapid adoption of GenAI and enterprise cloud workloads. These strong fundamentals drove the stock’s outperformance, and the company is set to provide more details at its October analyst conference.

BSD Analysis:
Oracle has quietly built one of the most competitive AI-ready cloud infrastructures, with OCI winning deals thanks to low-latency networking and aggressive GPU scaling. Database modernization continues to drive sticky recurring revenue, and the business is far less cyclical than the market treats it. Cerner stabilization is underway, removing a major narrative overhang. Oracle remains undervalued relative to its new AI-cloud trajectory.

Pitch Summary:
PVH performed well… demonstrating that while quarterly earnings could have some volatility, the long-run earnings per share power of this company remains intact at over $10 per share. After hiccups at the Calvin Klein brand earlier this year, the company has gotten it back on track. PVH also remains our largest share repurchaser for the year after buying a teens percentage of shares outstanding at great prices. While this is a company that is sensitive to consumer trends, its brands resonate with a more price conscious buyer, plus the company still has numerous levers to pull to improve margins.

BSD Analysis:
PVH has executed a sharp turnaround, cleaning up distribution, tightening inventory, and refocusing Calvin Klein and Tommy Hilfiger on core brand identity. Margins are expanding as promotional activity normalizes and Europe stabilizes. The company’s capital discipline is much improved, and brand heat is picking back up. Despite real progress, the stock still trades like a structurally impaired fashion house. If PVH maintains current execution, earnings can surprise to the upside and drive a meaningful rerating.

Pitch Summary:
Global paint company Kansai Paint was a contributor in the quarter as the company delivered on earnings growth projections and benefited from reduced global trade tensions. Under the leadership of Kunishi Mori, the company implemented a number of shareholder friendly policies such as well-timed share repurchases and recently an increased dividend. The paint industry remains attractive as well, and Kansai Paint has further routes to optimize its operations in Europe and India. The company’s value approached our appraisal in the quarter, and we reduced our position.

BSD Analysis:
Kansai Paint is emerging stronger after years of operational drag, with overseas markets — especially India and Africa — now driving growth ahead of domestic performance. Cost control is improving, mix is shifting toward higher-margin architectural paints, and FX tailwinds are helping earnings visibility. The company lacks the prestige of global coatings leaders, but its emerging-market footprint gives it a unique growth engine. Valuation remains conservative despite rising profitability. As operating momentum continues, Kansai Paint looks like a cautious but credible Asian coatings compounder.

Pitch Summary:
Bio-Rad Laboratories, a healthcare products manufacturer, was a positive contributor after the company reported steadier earnings than the market expected in a difficult environment. This sets the company up for the ability to grow earnings in 2026 and beyond, more in-line with previous industry trends. The company’s important investment in Sartorius has also shown encouraging year-over-year trends following a difficult couple of years, and we are getting closer to a period when both companies will have increased strategic flexibility. In the meantime, Bio-Rad continues to be a material share repurchaser with its nearly net cash balance sheet.

BSD Analysis:
Bio-Rad remains one of the most technically credible players in life-science tools, with IP depth in PCR, antibodies, and immunology that gives it a durable niche even in a sluggish funding environment. The company’s operational reset is working — cost actions are lifting margins and the balance sheet is clean. End-market softness is real, but Bio-Rad’s recurring consumables base keeps earnings more stable than bears admit. The market still prices BIO like a stalled instruments company, not a high-ROIC specialty tools provider with improving execution. As research spending normalizes, Bio-Rad looks positioned for a solid margin and sentiment rebound.

Pitch Summary:
After a slow start to our holding period this year, Regeneron has found its footing and grown its value per share back to above where we started the year in our opinion. We still do not have to pay anything for multiple high quality pipeline candidates, and the company has become one of our larger share repurchasers with its net cash balance sheet.

BSD Analysis:
Core franchises (EYLEA/Dupixent economics) fund a robust pipeline, while net cash supports buybacks. As new indications mature, multi-year EPS growth visibility improves. On a premium but defensible multiple, upside rests on pipeline readouts and continued capital returns. Risks: biosimilar erosion and pricing.

Pitch Summary:
We initiated positions in both Rayonier and PotlatchDeltic in the quarter… the two companies announced an accretive merger after quarter end… both have been on offense with accretive share repurchase and asset sales to capture the wide gap between private and public market valuations. Now they are taking the next step to be on offense by joining forces. We expect the combined company to be our largest position, which is exciting given its combination of Business, People and Price.

BSD Analysis:
PCH brings mill integration and HBU potential to the combined platform; synergy capture and portfolio optimization are likely. Timber pricing normalization and cost discipline can lift EBITDA/acre. Valuation discounts to private timber comps and REIT peers create upside.

Pitch Summary:
We initiated positions in both Rayonier and PotlatchDeltic in the quarter. Rayonier was an immediate contributor. … the two companies announced an accretive merger after quarter end. Southeastern has a strong long-term history investing in timberland assets, including these two companies multiple times before. This has been a tough year for housing-related stocks… both have been on offense with accretive share repurchase and asset sales to capture the wide gap between private and public market valuations. Now they are taking the next step to be on offense by joining forces. We expect the combined company to be our largest position, which is exciting given its combination of Business, People and Price.

BSD Analysis:
Timber REITs offer inflation-hedged NAV with biological growth; the RYN–PCH merger promises scale synergies and lower G&A. Private-market timber valuations imply upside to public multiples; asset sales and buybacks arbitrage that gap. Housing sensitivity is a risk, but long-term pricing and HBU monetization provide offsets.

Pitch Summary:
We wrote about supermarket operator Albertsons earlier this year as a contributor in tougher stock market times. We took some off the table then but added back to our position in the third quarter on weakness. The stock was down on a quarterly earnings report that did not excite the market but was within our expectations. We were further pleased to see meaningful share repurchase at a high single digit annualized pace of shares outstanding. Later in the quarter, Albertsons’ industry was pressured by news of Amazon’s increased efforts in groceries… This remains a competitive industry, but it is also a steadily necessary one in which Albertsons has a strong position thanks to its great real estate, brand recognition and owner alignment. Our confidence was bolstered further after quarter end when the company reported another solid set of results and announced a sizeable accelerated share repurchase, further growing value per share.

BSD Analysis:
Defensive cash flows, owned real estate (~39% of stores), and accelerated buybacks underpin per-share value growth. Grocery is competitive, but ACI’s regional scale and loyalty ecosystem sustain margins. With a mid-single-digit FCF yield and delevering, a re-rating toward food retail peers is reasonable. Catalysts: ASR completion, asset sales, and margin mix from Own Brands.

Pitch Summary:
Similar to Kraft Heinz, the market is focused on the recent challenging macro environment. In spite of the macro, we have been pleased to see FDX’s focus on operational improvements. We expect the company’s separation next year of its Freight unit to be a highly impactful event for both value realization and long-term value per share growth at both companies, as their values can sum to over $350 per share.

BSD Analysis:
The Freight separation is a clear catalyst to surface disparate multiples (asset-heavy LTL vs. parcel). DRIVE efficiency actions and Ground mix shift support margin expansion. On a mid-teens EPS multiple for RemainCo plus LTL peer comps, a >$350 SOTP is defensible. Risks: macro volume, pricing discipline, and labor.

Pitch Summary:
IAC and MGM… We expect increased management urgency on value realization at both companies in the coming months. MGM, which we also own separately, reported a nice set of results but came under pressure later in the quarter as unregulated “prediction market” betting sites began to show signs of traction. While this could be an issue for MGM’s 50% stake in BetMGM, this is a small part of our appraisal that we already value conservatively, and what matters most remains the company’s dominant market share in Las Vegas and ability to monetize non-core assets elsewhere from a position of balance sheet strength.

BSD Analysis:
MGM’s core Las Vegas assets and freehold optionality anchor the thesis; BetMGM is valuable but not central to NAV. Balance sheet flexibility enables buybacks/asset sales; valuation leaves room as convention/travel normalizes. Monitor iGaming competitive dynamics and Macau contribution.

Pitch Summary:
Both companies have two of our lowest P/V ratios well under 50%. IAC’s spin-off of Angi earlier this year worked well. Currently, after deducting the market value for IAC’s holding in MGM, we are getting the rest of IAC for free. We expect increased management urgency on value realization at both companies in the coming months.

BSD Analysis:
IAC’s sum-of-parts discount is pronounced; post-Angi spin and MGM stake mark-to-market, the RemainCo is implied at de minimis value. Management’s history of spins/asset sales suggests catalysts ahead. Key risks include ad softness and People, Inc. trajectory, but capital allocation and buybacks can close the gap.

Pitch Summary:
The market is too focused on legacy headwinds and is missing the value-creating potential of the company's upcoming split into two businesses: the higher-growth Flavor Elevation unit, which should garner a teens EBITDA multiple, and the stable remaining company, which can trade at the same multiple total Kraft currently trades today. This would result in a combined stock price over $40 per share.

BSD Analysis:
A break-up could unlock multiple expansion for the faster-growing sauces/condiments portfolio while sharpening capital allocation for the core. Industry comps support a mid-teens EBITDA multiple for branded growth assets; even conservative math gets to >$40/share. Watch leverage trajectory and margin durability post-split. Near-term catalysts include formal separation milestones and targeted disposals.

Pitch Summary:
Children’s toy, media, and consumer products creator Mattel was a detractor for the quarter. Second quarter sales were below expectations as North American retailers adjusted ordering to domestic shipping vs. importing directly. This was to buy time to see if tariff rates abated, which resulted in a two-month lag in sales recognition. This resulted in North American sales down 16% while international segment sales increased 7%. Point-of-sale sell through at retailers was positive for Q2 and YTD showing healthy underlying demand as toys are somewhat non-discretionary. Mattel continues to execute operationally with improved gross margins even with lower-than-expected sales. While we believe 2025 will show overall modest sales growth, 2026 should accelerate given two new movies and at least one new digital game being launched in addition to a solid partner movie slate where Mattel produces related toys. In the interim, management is using almost all its FCF to repurchase shares at depressed prices. They plan to repurchase $340 million in 2H25 which equates to over 5% of shares outstanding.

BSD Analysis:
The thesis hinges on resilient brand demand, near-term channel timing noise, and a 2026 content slate that should reaccelerate revenue. Margin work is evident despite softer sales; with heavy buybacks, EPS power is building. On a mid-teens P/E against double-digit EPS CAGR potential, a re-rating is plausible as tariffs normalize and sell-through stays firm. Key watch items: inventory health at retailers, licensing momentum, and execution on digital games.

Pitch Summary:
As the company’s hedges mature, share repurchases continue and its Deep Utica resource potential becomes more apparent, the company should trade at a premium 10-15x FCF multiple. This, combined with higher-than-expected FCF per share from its integrated, low-cost approach, could drive the stock price well over $50 per share.

BSD Analysis:
CNX screens attractively on FCF yield with structural cost advantages from integrated midstream and a de-risking Deep Utica inventory. Share count is shrinking materially via buybacks, lifting FCF/share even in flat gas tapes. At ~4–6x EV/EBITDA on strip with improving basis differentials, valuation leaves room for multiple expansion toward the cited 10–15x FCF. Watch capital intensity, hedge roll-offs, and basis/price volatility; catalysts include updated Utica delineation, debt paydown, and incremental buyback authorizations.

Pitch Summary:
TripAdvisor – While in the short term TripAdvisor will trade on macro travel sentiment and short-term traffic numbers, we have been pleased with the growth in value per share and other developments at the company, as we also wrote about in our most recent Research Perspectives.

BSD Analysis:
TripAdvisor is stabilizing after years of strategic drift, with Viator becoming the breakout asset — a fast-growing marketplace with strong unit economics in experience bookings. Core metasearch remains challenged, but margins are improving. The sum-of-the-parts story is clearer now than at any time in the last decade. If Viator keeps scaling, TRIP has real rerating potential.

Pitch Summary:
Mattel detracted from quarterly results due to temporary shipment delays tied to tariff uncertainty. However, the fund noted underlying demand strength, margin improvement, and significant buybacks underway. Longleaf believes 2026 will mark a strong rebound with multiple new films and digital products driving revenue growth.

BSD Analysis:
Mattel’s turnaround is real — supply-chain cleanup, tighter cost control, and evergreen IP monetization have meaningfully improved profitability. Barbie proved the company still has cultural relevance, and film/content extensions offer incremental margin upside. Core toy demand remains mixed, but Mattel’s brand catalog is deep. The stock trades below long-term earnings power; it’s a steady turnaround with real IP tailwinds.

Pitch Summary:
White Mountains – We were glad to be able to increase our weighting in this insurance holding company at discounted prices during the quarter. White Mountains remains one of the most value-per-share-focused companies we know. They demonstrated this once again after quarter end with the highly accretive sale of their controlling interest in Bamboo for nearly a 4x return in ~2 years of ownership.

BSD Analysis:
White Mountains remains an elite capital allocator in specialty insurance and financial services, consistently creating value through disciplined underwriting, opportunistic acquisitions, and sharp portfolio rotations. The balance sheet is pristine and excess capital gives management ample flexibility. It’s a lumpy business, but long-term track record is exceptional. A high-quality compounder for investors who can tolerate volatility.

Pitch Summary:
CNX Resources – As the company’s hedges mature, share repurchases continue and its Deep Utica resource potential becomes more apparent, the company should trade at a premium 10-15x FCF multiple. This, combined with higher-than-expected FCF per share from its integrated, low-cost approach, could drive the stock price well over $50 per share.

BSD Analysis:
CNX is the contrarian’s favorite gas name — disciplined, free-cash-flow focused, and aggressively buying back shares while avoiding the capex traps peers fall into. Production is steady, decline rates are low, and costs are tight. The stock trades at a deep discount because CNX refuses to chase growth, but that’s exactly what makes it compelling. If gas prices lift even modestly, CNX becomes a cash-flow monster.

Pitch Summary:
Comfort Systems continued to perform well as one of the fund’s top industrial holdings. Strong backlog growth and sustained demand from data center construction projects underpinned results. Management execution and pricing discipline supported continued margin expansion. The company remains well positioned to benefit from AI and electrification-related infrastructure investments.

BSD Analysis:
Comfort Systems is the quiet giant of U.S. mechanical and HVAC contracting, consistently producing elite returns through disciplined bidding, strong execution, and steady M&A. Data centers and industrial facilities are driving massive demand for complex HVAC systems — a multi-year tailwind. Margins are expanding, backlog is robust, and the business converts earnings to cash at an impressive rate. FIX remains one of the strongest industrial compounders nobody talks about.

Pitch Summary:
Kratos contributed positively to performance as investors rewarded its leadership in tactical drone systems and defense modernization. The fund noted increased defense spending tied to autonomous warfare and AI-enabled systems, areas where Kratos is a first mover. The company’s backlog growth and margin expansion reflect execution strength and rising demand from both U.S. and allied militaries.

BSD Analysis:
Kratos is one of the few pure-play emerging defense-tech stories with real traction — unmanned systems, tactical drones, satellite comms, and missile-defense enablers. Growth is accelerating as DoD budgets shift toward lower-cost, high-volume platforms. Margins are improving, and the backlog is hitting new highs. Still risky due to program concentration, but the long-term thesis is powerful. KTOS remains a credible next-gen defense winner.